Car Purchases Dip in August, Leading Drop In Retail Sales

Published: September 15, 2004

Retail sales slid in August, the Commerce Department reported on Tuesday, as people steered away from buying cars and shoppers kept an eye on spending after splurging in July.

Retail sales fell 0.3 percent in August, after a 0.8 percent gain in July. Economists had expected a drop of 0.1 percent. In recent months, overall retail sales have seesawed from one month to the next.

''Retailers are hoping that fall and winter sales are more consistent and predictable,'' said Rosalind Wells, chief economist at the National Retail Federation.

The decline in retail sales in August mostly reflected a 1.9 percent drop in car sales, which rose 2.2 percent in July. Paul Taylor, chief economist at the National Automobile Dealers Association, said the decline came despite incentives and promotions.

''The soft spot in the economy,'' he said, ''made consumers less willing to take on a new vehicle purchase.''

Excluding car sales, which can swing widely from month to month, sales by other merchants rose 0.2 percent in August. That was down from a 0.3 percent increase in July but was still the fourth consecutive monthly rise.

In August, sales declined at furniture, clothing and department stores. Sales at bars and restaurants also fell. Sales rose at building and garden supply shops, electronics and appliance stores, sporting goods, books and music stores, health and beauty shops and gasoline stations.

Sung Won Sohn, chief economist at Wells Fargo, said that mixed retail picture reflected shoppers being selective in their purchases given the impact of high energy prices, which have left people with less money to spend on other goods, and a labor market that was recovering slowly.

Bad weather in some parts of the country and a late Labor Day, which came a week later than a year ago and pushed sales into the September reporting period, also affected August's sales, economists said.